At this time, Corporations in the United States pay the highest corporate tax rates in the world. They range from 35% to 41.6% of their income in combined state and federal taxes. While President Obama is promising to raise the rates to 46.2% in 2010, other countries have been lowering their corporate rates to encourage economic growth. Rates now include 34.4% in France, 25% in China and 12.5% in Ireland. What does this mean for American businesses?
Many economists see the high taxes as prohibitive to economic and corporate growth. High taxes give corporations less incentive to retain and hire new employees, to expand their operations, to invest in research and development or pay more in dividends to their shareholders. Several economists are concerned that other countries lowering their tax rates while the US is raising ours will drive more American businesses overseas to remain profitable, taking their jobs, growth and profit with them.
The current administration is also pushing yet another regulation to strangle American businesses, Cap and Trade. While promoted as an environmental necessity to save the planet from Global Warming, this regulation actually does more to tax the middle class and corporations than it does to "save" the environment. It was devised as a complicated bureacracy creating a market for carbon credits, but in actuality is a complicated penalty tax on energy. Opponents on both sides of the aisle say it is simply a device to redistribute wealth wrapped in the cloak of environmental protection.
With stricter environmental regulations being piled on American businesses, while other countries are rejecting environmental controls, it is a wonder more businesses aren't sprinting to China and India. What does it say about our country that Communist China is now more hospitable to Corporate growth than the USA?
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